2 Economists Say They See No Recession In '88

HONOLULU — Although badly shaken by the turmoil triggered by the Wall Street collapse, the nation's economy does not appear headed for recession next year, two economists agreed Monday.

Don Straszheim, chief economist for the brokerage Merrill Lynch, said the financial market's upheaval is ''damaging but not fatal.''

John Tuccillo, chief economist for the National Association of Realtors, agreed but predicted that housing activity will decline from the levels of both 1986 and 1987.

Speaking during the National Association of Realtors convention, Straszheim noted that a number of forecasters predict a recession for next year. ''We think they're wrong,'' he said.

Factors arguing against recession in the coming year include modest inflation and strong employment growth, Straszheim said.

The economist said ''positive'' spinoffs from the Oct. 19 crash, when the New York Stock Exchange's Dow index plunged more than 500 points, include reducing consumption, which had been at unsustainable levels; lowering interest rates, which had been rising; easing fears of inflation; increasing the nation's savings rate, which had fallen to record low levels; and getting Washington moving on the federal deficit problem.

Straszheim warned that significant progress must be made on both the budget and trade deficits before confidence returns to the world's financial markets. Lack of progress could make the question of recession not one of if but of when, he said.

John Tuccillo, the Realtors' chief economist, also predicted that 1988 will not see a recession, but he said that he expects housing activity to decline from both 1986 and 1987 levels.

He projected 3.25 million sales of existing homes next year and 630,000 new-home sales. Housing starts should be about 1.52 million units, he said, with single-family housing accounting for 1.2 million of that total.

Tuccillo also called for significant action on the nation's trade and budget deficit problems, saying, ''Gimmicks are not going to turn the financial markets around.''